Full opinion text
TABLE OP CONTENTS FACTS ...................................... H36 JURISDICTION .............................. H45 ANALYSIS .................................. 1147 Title VIII .................................. 1147 Plaintiffs’ Prima Facie Case .............. 1148 Supplemental Defendants’ Justifications ... 1152 California Government Code § 65008 ........ 1157 Discrimination on the Basis of Race ...... 1157 Discrimination on the Basis of Income ____1158 Discrimination on the Basis of Government Assistance ............................... 1159 CONCLUSION ............................... 1160 APPENDIX A ...............................1160 MEMORANDUM AND ORDER ENJOINING HAWTHORNE FROM VIOLATING TITLE VIII, 42 U.S.C. § 3604(a), AND CALIFORNIA GOV.CODE § 65008(b), (c) & (d). FACTS PREGERSON, Circuit Judge. In February of 1972, persons living in the path of the proposed 1-105 or Century Freeway, the Los Angeles chapter of the National Association for the Advancement of Colored People (NAACP), and others filed this environmental and civil rights lawsuit against state and federal governmental officials. In April of 1972, the plaintiffs amended the complaint to add the city of Hawthorne, located in the path of the freeway, as an additional plaintiff. The First Amended Complaint requested injunctive and declaratory relief that would require governmental officials to comply with federal and state laws designed to (1) protect the environment; (2) assure the availability of decent, safe, and sanitary replacement housing to displaced homeowners and tenants; and (3) eliminate discrimination against minority and poor persons seeking replacement housing. In July of 1972, this court preliminarily enjoined further work on the freeway project until federal and state officials complied with environmental protection and relocation assistance statutes. Keith v. Volpe, 352 F.Supp. 1324 (C.D.Cal.1972), aff'd en banc sub nom. Keith v. California Highway Commission, 506 F.2d 696 (9th Cir.1974), cert. denied, 420 U.S. 908, 95 S.Ct. 826, 42 L.Ed.2d 837 (1975). After this court’s decision, the parties entered into negotiations that culminated in the Amended Final Consent Decree (the Consent Decree). On September 22, 1981, this court approved the Consent Decree, dissolved the preliminary injunction, and permitted further work on the freeway project pursuant to the decree’s provisions. Under paragraphs VI and VIII of the decree, this court retained jurisdiction to enforce or amend the decree until the court enters a Judgment of Dismissal after full compliance with all terms of the decree. Amended Final Consent Decree at pp. 15-16. One of the purposes of the decree is “to provide for the housing needs of those living in the area of the proposed path of the freeway.” Amended Final Consent Decree at p. 3. In particular, the decree requires that state and federal defendants provide freeway displacees with 3700 units of decent, safe, and sanitary replenishment housing either by rehabilitating existing structures or constructing new units. Id., Exhibit B at pp. 1-4. Replenishment housing is to be provided in accordance with the decree’s “Housing Plan.” Amended Final Consent Decree at pp. 4, 15. The decree incorporates an Exhibit B entitled “Development and Implementation of Housing Plan,” detailing the state and federal defendants’ commitments to “the provision of housing as part of the 1-105 project in order to replenish the housing stock of communities affected by the freeway and to relocate persons now residing within the right-of-way.” Id., Exhibit B at p. 1. The California Department of Housing and Community Development (HCD) is the lead agency responsible for coordinating and implementing the Housing Plan. Id., Exhibit B at p. 9. The decree also establishes a Housing Advisory Committee, which includes representatives of each of the cities affected by the freeway, to assist HCD in preparing the Housing Plan. Id., Exhibit B at pp. 11-14. Exhibit B sets out certain basic parameters HCD must follow in preparing the Housing Plan. Amended Final Consent Decree, Exhibit B at p. 16. Under the Housing Plan, 55% of all replenishment units must be affordable to low income households and 25% must be affordable to moderate income households. Low and moderate income households displaced by the Freeway must be given first priority to occupy the replenishment rental units. Finally, the Housing Plan must place as many of the units as possible in the “primary zone” — i.e., a zone six miles on each side of the proposed Century Freeway right-of-way. The freeway, when completed, will run through the northern edge of Hawthorne, affecting census tracts 6017, 6020.02, 6021.01, and 6027. Although the freeway will reduce Hawthorne’s housing stock by approximately 1,104 household units, the Housing Plan allocates only 275 units of replenishment housing to be built in Hawthorne. Moreover, to date, there are only two Century Freeway-related housing projects pending construction in Hawthorne: a 44 unit condominium development and a 26 unit apartment development, neither of which required any zone changes, lot divisions, or special use permits from the city. Exhibit 202 at pp. 3-4. There is also a 42 unit condominium development on property that the city is presently in the process of annexing and 16 single family dwellings outside the city limits, but within Hawthorne’s sphere of influence. Id. Even including the developments outside of Hawthorne’s city limits, there are only 128 units of housing pending development out of a total of 275 units allocated. The litigation presently before this court concerns two Century Freeway apartment developments proposed to be constructed in the Moneta Gardens area of Hawthorne. The first, the “Cerise Development,” located at 14330 Cerise Avenue, consists of 32 apartment units. On January 26, 1984, the developer, Shapell Housing, Inc., filed applications with Hawthorne’s Planning Department for a change of zone from M-l (limited industrial) to R-3 (high density residential) and for a site development permit. The Century Freeway Housing Program had approved the project and the State had agreed to fund it pursuant to the decree. Exhibit 6 at p. 2. The Planning Department recommended approval of the applications, stating that: Staff analysis of the unit design and project density finds it to be a good example of a high density development that adequately mitigates the overpowering mass of typical high density residential developments. Also, the spacial arrangement of the units, in staff’s opinion, creates a living environment which is protective and complimentary with other residential development in the area. Exhibit 6 at p. 2. However, “[njotwithstanding” the project’s advantages, the staff noted that “the project is unique to the city as it is funded by a State agency.” Id. The staff concluded that the Consent Decree’s requirement that 55% of the units be rented to low income tenants conflicted with the city’s policy “to support the dispersion of low income housing” because “the project clearly presents itself as a concentration of low or moderate income households.” Id. at p. 3. Therefore, the staff recommended approval of the developer’s applications on condition that the developer record a covenant providing that only 20% of the units could be rented to low income households. Id. at 5. The Planning Department staff subsequently revised its recommendation for approval, increasing the percentage of low-income units to 35%. Exhibit 7 at p. 4. On September 5,1984, the Planning Commission approved the Cerise Development change of zone and site development applications subject to the 35% covenant the Planning Department had recommended. Exhibit 208. Shapell appealed the decision of the Planning Commission to the Hawthorne City Council. Before the public hearing on this appeal, the Director of HCD sent a letter to the Mayor of Hawthorne, explaining that because the 35% covenant conflicted with the terms of the Consent Decree, the State would be unable to fund the Cerise Development if the covenant were required. Letter of October 3,1984, Exhibit 1 at p. 1. Nevertheless, on January 14, 1985, the City Council affirmed the action of the Planning Commission, including its requirement of the 35% covenant. The second development, the “Kornblum Development,” located at 13000 and 13001 Kornblum Avenue, is a 96 unit apartment complex. The developer, Goldrich & Kest, Inc., filed applications for a lot split, a zoning change from H (horticultural) to R-3 (residential), and site development. The Century Freeway Housing Program had earlier approved the project and the State had agreed to fund it pursuant to the decree. The Planning Department recommended approval of the applications, stating that the Kornblum Development was "a good example of a medium density development that adequately mitigates the overpowering mass of typical two and three story apartment developments in the area.” Exhibit 9 at p. 4. The staff recommended, however, that the developer be required to record a covenant, identical to the covenant required for the Cerise development, providing that no more than 35% of the units be rented to low income families. Id. at 7. The Planning Commission held a public hearing on October 3, 1984. A number of Hawthorne residents appeared and expressed opposition to the development. At the end of the hearing, the Planning Commission voted 3-0, with one abstention, to deny Goldrich & Kest’s applications for lot split, zone change, and site development. Exhibit 15 at p. 6. Goldrich & Kest appealed the Planning Commission’s denial of approval to the City Council. The Council held two public hearings on November 13 and November 26, 1984. Local residents attended the November 13 hearing and expressed opposition to the project. They raised concerns about possible loss of taxes to the city, increase in traffic, overcrowding of schools, and failure to maintain the building, but also expressed opposition to the low income tenants that would reside in the building. The developer addressed each of the legitimate concerns raised. He explained that the tax loss to the city, if any, would be minimal and offered to enter a ten year in lieu of property tax agreement to make up the difference in taxes between what the city would receive from the Kornblum Development and what it would receive from any private development. Exhibit 20 at pp. 9-10. To alleviate the concerns about traffic and schools, the developer negotiated with the Century Freeway Housing Program to commit all 36 of the development’s one bedroom units to senior citizens, who will not have school age children or cause much traffic at peak hours. Exhibit 20 at p. 4. Finally, the developer explained that the State requires him to create a reserve of 1% of the construction cost to provide for ongoing maintenance costs and that HCD will inspect the premises yearly and order the owner to make any necessary repairs out of the reserve fund. Exhibit 20 at pp. 53-59. At the close of the November 13 hearing, the Council members requested the City Manager to research the tax, school, traffic, and maintenance issues. In a letter to the City Council dated November 23, 1984, the City Manager essentially confirmed what the developer had stated at the November 13 hearing. Exhibit 16. He reported that the schools in the Moneta area could accommodate between 150 and 200 more students and that the Kornblum Development combined with another 40 unit replenishment development would produce approximately 200 students. Id. at p. 1. He also noted that the developer had agreed to participate in a “school development assessment” if the city imposed it on all new residential developments larger than a single family house. Id. at p. 2. The Manager reported that only public housing authorities, such as the Hawthorne Housing Authority, could purchase the Kornblum Development from the State and not pay taxes on it. Id. at p. 3. He also confirmed the developer’s assertion that HCD conducts an annual inspection to determine when the 1% maintenance fund should be expended. Id. At the hearing on November 26, both Kornblum’s developer and the executive director of the Century Freeway Housing Program spoke at length to clarify misconceptions about the mechanics of the low-income rental program and to express their willingness to accommodate Hawthorne’s concerns. Exhibit 21 at pp. 7-12, 14-26. At the end of the discussion, Council-member Ainsworth stated that she still desired to deny the Kornblum applications for school overcrowding and traffic reasons. Exhibit 21 at pp. 29-30. Councilmember York responded: If — if we just let the area alone to our own developers, eventually they’re going to be developing that area. We’re going to have an additional impact whether it’s by this development, or additional development down the line. That’s why I’m saying we have more at issue to concern ourself with here besides just this — just this one project. The project as it sits on itself here looks — looks beautiful. But there are these other problems about density, school impact — impacting that’s going to occur, I think whether this project gets passed or not. I think that a lot of the problems that you’re — that’s [sic] you’re citing are — are going to be affected not just with this project, but with future projects down the line, whether they’re smaller projects than this one, or a similar size project. Id. at pp. 30-31. Mayor Hocker agreed that “anything that we put over there is going to put in a great deal of traffic. I think anything that’s other than this is going to bring even more traffic.” Exhibit 21 at p. 32. An unidentified councilmember added that “my problem with this whole project is you keep talking about the impact on the schools, and I’m not convinced that by shutting this project down is going to alleviate the impacting of the schools. Because if this project isn’t built, there are going to be other projects crop up, and we are going to have more school children in the area, and I don’t see any way for us to get around that.” Id. at p. 37. Despite these comments of her co-councilmembers, Councilmember Ainsworth moved to uphold the recommendations of the Planning Commission. Exhibit 21 at p. 31. Councilmember Bookhammer seconded the motion, but explained his decision. He stated that his “main goal is to commit, create to some, additional senior citizen housing which it appears that we’ve done. Not come close to, but have done.” Id. He voted against the project, however, because “even after all of these comments have been made and the things that were given to the city by the developer, I still hear an adamant — referendum from the residents of the neighborhood that they still do not want this project, and they’re the ones who have to live with the project being in their neighborhood. ... I have to go along with that.” Id. at pp. 31-32. Councilmember Ainsworth agreed that “it’s like Councilman Bookhammer said. The people in the community don’t want it.” Id at pp. 34-35. When the issue was put to a vote, Councilmembers Ainsworth, Bookhammer, and York voted against the project, York admitting that he was voting “against my better judgment.” Exhibit 21 at pp. 41-42. Only Mayor Hocker voted in favor of the project. Councilmember Ainsworth concluded that “They can fight City Hall and be heard. I think tonight they’ve felt that they have been heard, and I appreciate it.” Id. at p. 42. In its resolutions denying the applications, the City Council did not mention the public opposition, but gave the following reasons for its decisions: (1) the proposed lot split would create a parcel with continued use for a wood frame single family dwelling and represent poor lot configuration; (2) proposed zoning for the parcels would leave parcels one and four zoned H (horticultural) and is contrary to principles of good planning; (3) the proposed development is in an area designated by the Moneta Gardens Land Use Plan for medium density residential use, and the proposed site development plan would be high density residential use; (4) the development would contribute to overcrowding of schools; (5) the development would create undue traffic congestion, noise and lack of adequate open space; (6) the development is inconsistent with applicable and specific general plans; (7) the development encourages random and incompatible land uses and discourages highest and best land use; (7) the site is not physically suitable for the proposed density of the development; (8) the development would be materially detrimental to the public welfare by adding unmitigated traffic congestion, noise, and other adverse conditions associated with overcrowding and would be injurious to property and improvements in the vicinity of the lot split and to adjoining and adjacent properties; and (9) the development would defeat the intent and purposes of the city’s zoning ordinance. See Exhibits 12-14. In response to Hawthorne’s actions on the Cerise and Kornblum developments, the plaintiffs in this lawsuit submitted a motion for leave to file a supplemental complaint to add allegations that Hawthorne had illegally refused to permit the construction of two replenishment rental developments within its borders. At the same time, the plaintiffs filed a motion to enjoin preliminarily Hawthorne’s refusal to permit the construction of the two developments. Hawthorne opposed both motions and submitted to Goldrich & Kest a compilation of 52 alternate parcels of property on which to build Century Freeway-related housing. Exhibit 202 at p. 7, exhibits B & C. On April 10, 1985, this court granted plaintiffs leave to file the supplemental complaint and also permitted the California Department of Housing and Community Development, the California Department of Transportation, and Goldrich & Kest, Inc., to intervene in the supplemental action. The supplemental complaint and motion for preliminary injunction asserted five claims for relief against the City of Hawthorne and its officials for their actions in imposing the 35% limitation on the number of units in the Cerise Development that may be rented to low income tenants and in denying the lot split, change of zone, and site development applications for the Kornblum Development: 1. violation of the Supremacy Clause of the United States Constitution; 2. violation of the Fair Housing Act, Title VIII of the Civil Rights Act of 1968, 42 U.S.C. §§ 3601-3631; 3. violation of the Fourteenth Amendment to the United States Constitution; 4. violation of California Government Code § 65008; and 5. violation of Equal Protection Clause, Article I, § 7 of the California Constitution. Pursuant to Fed.R.Civ.P. 65(a)(2), the parties agreed to advance the trial of the supplemental action on the merits and consolidate it with the hearing of the application for a preliminary injunction. At a bench trial on April 17, 1985, the parties submitted all of their evidence in the form of documents and declarations. The court admitted all of the proffered documents into evidence except Exhibits 5 & 11, which it held to be inadmissable hearsay. After both sides rested, the court heard oral argument on behalf of all of the parties and requested them to file post-trial briefs. After close review of the briefs and all of the documentary evidence, on May 10, 1985, the court ordered the parties to further brief the question of the plaintiffs’ and intervenors’ standing. On May 24, 1985, the court reopened the proceedings and requested the plaintiffs and state intervenors to compile information on the racial and economic composition of the Hawthorne census tracts affected by the freeway. In response to the court’s requests, the plaintiffs moved to add four additional plaintiffs to eliminate any question concerning their standing to bring the suit. In addition, the plaintiffs and state intervenors went to two separate sources to gather the requested racial and economic data. First, the plaintiffs conducted a telephone and door-to-door survey of the Hawthorne displacees currently residing in the affected census tracts. Second, Caltrans and HCD summarized information in existing Caltrans files on the displacees and supplemented the file search with phone calls and personal interviews. The plaintiffs and intervenors thus presented three separate reports on the racial and economic composition of the affected census tracts: (1) the 1980 U.S. Census data, which they originally submitted with their motion for a preliminary injunction, (2) the results of the telephone and door-to-door survey, and (3) the summary of Caltrans’s files. The City of Hawthorne also summarized the information in Caltrans’s files and submitted its summary in addition to 1980 U.S. Census data on the racial composition of the census tracts in which the 52 alternate parcels are located. On July 24, 25, and 30, 1985, the trial resumed. The court heard oral argument on the plaintiffs’ motion to add additional plaintiffs and granted the motion. The court also heard testimony and oral argument on the admissibility in evidence of Exhibit 44, plaintiffs’ summary report of Dr. James H. Johnson’s social survey; Exhibit 45, plaintiffs’ and state intervenors’ separate summaries of the information contained in Caltrans’s active files on Hawthorne displacees; Exhibit 46, plaintiffs’ and state intervenors’ charts summarizing the results of the numerous separate summaries contained in Exhibit 45; and Exhibit 201, supplemental defendants’ summary of Caltrans’s files. At the conclusion of the trial, the court ordered the exhibits admitted into evidence. The court then ordered the case submitted. JURISDICTION This court has jurisdiction of the Supremacy Clause and Fourteenth Amendment causes of action pursuant to 28 U.S.C. § 1343(a)(3) (1982) and of the Title VIII cause of action pursuant to 28 U.S.C. § 1343(a)(4) (1982). Because the federal claims “have substance sufficient to confer subject matter jurisdiction on the court” and the state and federal claims “derive from a common nucleus of operative fact,” this court also has pendent jurisdiction of the California Government Code and California Constitution causes of action. United Mine Workers of America v. Gibbs, 383 U.S. 715, 725, 86 S.Ct. 1130, 1138, 16 L.Ed.2d 218 (1966). See Aragon v. Federated Department Stores, 750 F.2d 1447, 1457 (9th Cir.1985). The plaintiffs have standing to bring the Title VIII cause of action under the principles enunciated in Gladstone, Realtors v. Village of Bellwood, 441 U.S. 91, 99 S.Ct. 1601, 60 L.Ed.2d 66 (1979). In Gladstone, the Supreme Court held that Congress, in enacting Title VIII, “expand[ed] standing to the full extent permitted by Art. III.” Id. at 100, 99 S.Ct. at 1608. To establish standing, the Title VIII plaintiff must merely show the Article III minima — i.e., that he “suffered ‘a distinct and palpable injury to himself ... that is likely to be redressed if the requested relief is granted.” Id. (quoting Simon v. Eastern Kentucky Welfare Rights Organization, 426 U.S. 26, 38, 96 S.Ct. 1917, 1924, 48 L.Ed.2d 450 (1976)); see also Havens Realty Corp. v. Coleman, 455 U.S. 363, 375-76, 102 S.Ct. 1114, 1122-23, 71 L.Ed.2d 214 (1982) (“the only requirement for standing to sue under [Title VIII] is the Art. Ill requirement of injury in fact.”). In the instant case, three individual low-income minority plaintiffs who will be displaced by the Century Freeway testified that they would like to be relocated in affordable housing in Hawthorne. Ms. Rose Hillman, a Black Hawthorne resident with an income of $12,000, testified that she would like to be relocated in the same vicinity as her current residence and would apply to live at the Kornblum and Cerise Developments, if they are built. R.T. SO-SO (July 24, 1985). Mr. Earl Wright, another Black Hawthorne resident with an income of approximately $12,000, also testified that he would like to be relocated in the same vicinity and would apply to live at the proposed Kornblum and Cerise Developments, although, if he could afford it, he would prefer to own a house instead of renting an apartment. R.T. 43-46. Finally, Mr. Pablo Zapeta, an Hispanic Hawthorne resident with a family income of approximately $14,000, testified that he would like to be relocated in the Hawthorne area and would apply to live in the proposed Cerise and Kornblum Developments. R.T. 56-59. In addition, Mr. Boris Storzch, of the Century Freeway Housing Program, testified that Hillman, Wright, and Zapeta would be eligible to live in either the Cerise or Kornblum Developments under the Century Freeway Housing Program Relocation Apartment standards. R.T. 76-77. Hawthorne’s denial of the Kornblum applications and imposition of a 35% quota on the number of units that can be rented to low income tenants in the Cerise Development jeopardizes the ability of Hillman, Wright, and Zapeta to relocate in Hawthorne. As noted above, there are, at most, only 128 units of relocation housing currently available in Hawthorne. If more relocation housing isn’t built soon — before Hillman, Wright, Zapeta, and 1,100 other Hawthorne families are displaced — the displacees will have to move outside of Hawthorne to find affordable housing. These facts constitute a “distinct and palpable injury.” Gladstone, 441 U.S. at 100, 99 S.Ct. at 1608. Because their action “focuses on [two] particular projects] and is not dependent on speculation about the possible actions of third parties not before the court,” the plaintiffs have also shown that their injury is likely to be redressed if this court grants the requested relief. Village of Arlington Heights v. Metropolitan Housing Development Corp., 429 U.S. 252, 264, 97 S.Ct. 555, 562, 50 L.Ed.2d 450 (1977). Therefore, the court finds that the plaintiffs have standing to bring their claim under Title VIII. For the same reasons, the court finds that the plaintiffs have standing to bring their claim under subsections (b) and (c) of California Government Code § 65008, which prohibit discrimination against a residential development on the basis of the race or low income level of the intended tenants. In addition, intervenor Goldrich & Kest has standing to bring a claim under subsections (b) and (c) as the developer of one of the residential developments discriminated against. The plaintiffs also have standing to bring a claim under subsection (d) of California Government Code § 65008, which prohibits a city from imposing requirements on a development financially assisted by the state or federal governments different from those imposed on nonassisted developments. Because the plaintiffs are clearly the intended beneficiaries of the state’s financial assistance, they have shown a “distinct and palpable injury” as a result of the city’s requirement that the developer record a covenant providing that no more than 35% of the units in the Cerise Development may be rented to low income tenants: the State has refused to finance the development if such a covenant is recorded, and the developer will not build the development without state assistance. Moreover, the state intervenors, California Department of Housing and Community Development and California Department of Transportation, have standing because they are the state agencies providing the residential development financial assistance referred to in section 65008(d). ANALYSIS I. Hawthorne’s imposition of the 35% limitation on number of units in the Cerise Development that may be rented to low income tenants and its denial of the lot split, zone change, and site development applications for the Kornblum Development violate Title VIII, 42 U.S.C. §§ 3601-3631. Under Title VIII, commonly known as the Fair Housing Act, it is unlawful to “make unavailable ... a dwelling to any person because of race, color, religion, sex, or national origin.” 42 U.S.C. § 3604(a) (1982). The circuits that have addressed the issue have agreed that the phrase “because of race” does not require proof of diseriminatory intent; rather, proof of discriminatory effect may be sufficient to demonstrate a violation of the Fair Housing Act. See Smith v. Town of Clarkton, 682 F.2d 1055, 1065 (4th Cir.1982); Resident Advisory Board v. Rizzo, 564 F.2d 126, 146-48 (3d Cir.1977), cert. denied, 435 U.S. 908, 98 S.Ct. 1457, 55 L.Ed.2d 499 (1978); Metropolitan Housing Development Corp. v. Village of Arlington Heights, 558 F.2d 1283, 1289-90 (7th Cir.1977), cert. denied, 434 U.S. 1025, 98 S.Ct. 752, 54 L.Ed.2d 772 (1978); United States v. City of Black Jack, 508 F.2d 1179, 1184-85 (8th Cir.1974), cert. denied, 422 U.S. 1042, 95 S.Ct. 2656, 45 L.Ed.2d 694, reh’g denied, 423 U.S. 884, 96 S.Ct. 158, 46 L.Ed.2d 115 (1975). Once the plaintiff has established a prima facie case by demonstrating racially discriminatory effect, the burden shifts to the defendant to demonstrate that non-discriminatory reasons justify its conduct. See Rizzo, 564 F.2d at 149; Black Jack, 508 F.2d at 1185. If the defendant offers no valid non-discriminatory reason for its actions, then the plaintiff has succeeded in proving a Title VIII violation. If the defendant does offer valid non-discriminatory reasons, the court must determine whether they are substantial enough to justify the racially discriminatory effect. See Smith, 682 F.2d at 1065; Rizzo, 564 F.2d at 148-49; Arlington Heights, 558 F.2d at 1293; Black Jack, 508 F.2d at 1186-87. The circuits have applied different standards, however, in determining how important a discriminatory effect is to proving a prima facie case and in determining whether the defendant’s proffered justifications are sufficient to rebut the plaintiff’s prima facie case. Although the Ninth Circuit has not yet addressed the proper standards to apply, see Halet v. Wend Investment Co., 672 F.2d 1305, 1311 (9th Cir.1982), this court finds that Hawthorne would be liable under any of the standards the other circuits have applied. A. Prima facie case. The Third and Eighth Circuits seem to take the position that proof of discriminatory effect alone is always sufficient to establish a prima facie Title VIII violation. Rizzo, 564 F.2d at 148; Black Jack, 508 F.2d at 1184-85. In contrast, the Seventh Circuit has held that proof of discriminatory effect without a showing of discriminatory intent establishes a Title VIII violation only under some circumstances. Arlington Heights, 558 F.2d at 1290. The Arlington Heights court listed four “critical factors” in determining whether proof of discriminatory effect is sufficient in each particular case: “(1) how strong is the plaintiff’s showing of discriminatory effect; (2) is there some evidence of discriminatory intent, though not enough to satisfy the constitutional standard of Washington v. Davis [426 U.S. 229, 96 S.Ct. 2040, 48 L.Ed.2d 597 (1976) ]; (3) what is the defendant’s interest in taking the action complained of; and (4) does the plaintiff seek to compel the defendant to affirmatively provide housing for members of minority groups or merely to restrain the defendant from interfering with individual property owners who wish to provide such housing.” Id. at 1290. The Fourth Circuit has also-adopted this four factor analysis. Smith, 682 F.2d at 1065. Without deciding whether the Seventh Circuit’s stricter requirements for establishing a Title VIII prima facie case are correct, this court finds that the plaintiffs in the instant case not only have shown discriminatory effect, but also have made a sufficient showing on two of the other three factors under the Arlington Heights analysis to establish a prima facie case. The court will now address each of the four factors. (1) Effect. The evidence clearly demonstrates that Hawthorne’s actions in imposing the 35% limitation on the Cerise Development, knowing that such a limitation would prevent HCD from funding the project, and in denying the applications for zone change, lot split, and site development on the Kornblum Development had a racially discriminatory effect. The following chart summarizes the results of the plaintiffs’ survey (Exhibit 44), the plaintiffs’ and state intervenors’ summary of the separate summaries of Caltrans’s files (Exhibit 46), the plaintiffs’ presentation of 1980 U.S. Census data (Exhibits 50-A to 50-C), and the supplemental defendants’ summary of Caltrans’s files (Exhibit 214): 1. Racial composition of Hawthorne displacees in census tracts affected by the Freeway and of residents in tracts where Cerise and Kornblum Developments are proposed. A. Tracts affected by the Freeway. Plaintiffs’ Social Survey (Exhibit 44 at p. 9) 26.9% White, 35.2% Black, 26.9% Hispanic, 7.5% Asian or Pacific Islander, 2.4% Other. Total Black and Hispanic = 62.1%. Total Non-White = 73.1%. Plaintiffs’ and State Intervenors’ Summary of Caltrans’s Files (Exhibit 46 at P- 2) 23.2% White, 37.4% Black, 29.9% Hispanic, 4.4% Asian or Pacific Islander, 5.0% Other. Total Black and Hispanic = 67.3%. Total Non-White = 76.8%. Plaintiffs’ Summary of 1980 U.S. Census Data (Exhibit 50-A at p. 2) 21% White, 54% Black, 21% Hispanic, 3% Asian or American Indian, 1% Other. Total Black and Hispanic = 75%. Total Non-White = 79%. Supplemental Defendants’ Summary of Caltrans’s Files (Exhibit 214 at p. 1) Ethnicity was known in 65.4% of the files reviewed. Of those files, 8.2% were White, 27% Black, 42% Hispanic, 2.6% Asian, 19% Other. Total Black and Hispanic = 69%. Total Non-White = 91.8%. B. Tracts where Cerise and Kornblum Developments are proposed. Plaintiffs’ Summary of 1980 U.S. Census Data (Exhibit 50-B) Kornblum: 59% White, 10% Black, 23% Hispanic, 8% Asian or American Indian, 1% Other. Total Black and Hispanic = 33%. Total Non-White = 41%. Cerise: 48% White, 10% Black, 31% Hispanic, 10% Asian or American Indian, 1% Other. Total Black and Hispanic = 41%. Total Non-White = 52%. 2. Percentage of Hawthorne displacee households that are low income households. Plaintiffs’ Social Survey (Exhibit 44 at p. 10) 54.5% low income. Plaintiffs’ and State Intervenors’ Summary of Caltrans’s Files (Exhibit 46 at p. 3) 59.3% low income. Plaintiffs’ Summary of 1980 U.S. Census Data (Exhibit 50-C) 35% low income. Supplemental Defendants’ Summary of Caltrans’s Files (Exhibit 214 at p. 1) Income was known in 58.6% of the files. Of those files, 52% were low income. 3. Percentage of low income Hawthorne displacee households that are minority households. Plaintiffs’ Social Survey (Exhibit 44 at p. 11) Total Black & Hispanic = 63.8%. Total Non-White = 71.7%. Plaintiffs’ and State Intervenors’ Summary of Caltrans’s Files (Exhibit 46 at p. 4) Total Black & Hispanic = 73.6%. Total Non-White = 78.5%. 4. Percentage of low income Hawthorne displacee households that desire to relocate in a Century Freeway housing project in Hawthorne. Plaintiffs’ Social Survey (Exhibit 44 at p. 12) 67.4% Plaintiffs’ and State Intervenors’ Summary of Caltrans’s Files (Exhibit 46 at p. 5) 68.1% Supplemental Defendants’ Summary of Caltrans’s Files (Exhibit 214 at p. 1) Relocation preference was known in 34.9% of the files. Of those files, 27.8% indicated a desire to relocate in Hawthorne. The four sources of evidence indicate that 62.1% (social survey) to 75% (U.S. Census) of the displacees are Black and Hispanic, and 73.1% (social survey) to 91.8% (supplemental defendants’ file summary) are non-White. Although the four sources of evidence vary widely on the percentage of the displacee households that are low income households — from a low of 35% (U.S. Census) to a high of 59.3% (plaintiffs’ file summary) — both the social survey and the plaintiffs’ summary of Caltrans’s files indicate that the percentage of the low income households that are minority households is roughly the same as the percentage of the entire group of displacee households that are minority households: 63.8% (social survey) to 73.6% (plaintiffs’ file summary) Black and Hispanic, and 71.7% (social survey) to 78.5% (plaintiffs’ file summary) non-White. Therefore, even though the 1980 U.S. Census data indicates that only 35% of the displacee households are low income, see Exhibit 50-C, the court can assume that the Census data, if available, would show approximately 75% of those low income households as Black and Hispanic and 79% of those households as nonWhite. See Exhibit 50-A at p. 2. The Seventh Circuit observed in Arlington Heights that “[t]here are two kinds of racially discriminatory effects which a facially neutral decision about housing can produce. The first occurs when that decision has a greater adverse impact on one racial group than on another.” 558 F.2d at 1290. In the instant case, roughly two-thirds of the low income displacees are members of an ethnic minority. The evidence also shows that roughly two-thirds of the displacees would apply to live in a state-assisted Century Freeway housing project in Hawthorne. Because two-thirds of the low-income displacees are members of an ethnic minority, failure to build the Cerise and Kornblum Developments, which provide subsidized housing for low-income displacees, impacts minority displacees twice as hard as it impacts white displacees. This showing alone is enough to establish a racially discriminatory effect. See Smith, 682 F.2d at 1061,1065 (there is “no doubt that the black population ... was adversely affected by the termination of the housing project” where “56% of all poverty-level families in the county are black, and 69.2% of all black families in [the county] are presumptively eligible for low income housing”); Arlington Heights, 558 F.2d at 1288 (because “a greater number of black people than white people in the Chicago metropolitan area satisfy the income requirements for federally subsidized housing,” the Village’s refusal to permit construction of a low income housing project had a racially discriminatory effect). In addition, there is a second type of racially discriminatory effect that a facially neutral decision about housing can produce. This is “the effect which the decision has on the community involved; if it perpetuates segregation and thereby prevents interracial association it will be considered invidious under the Fair Housing Act independently of the extent to which it produces a disparate effect on different racial groups.” Arlington Heights, 558 F.2d at 1290. See Black Jack, 508 F.2d at 1186 (trial court erred in failing to find discriminatory effect where only 3% more Blacks were affected than Whites because the “ultimate effect” of ordinance in question was to foreclose 85% of Blacks from obtaining housing in Black Jack). The ultimate effect of frustrating the Kornblum and Cerise Developments in the instant case is to prevent low income minority displacees from continuing to reside in Hawthorne. If affordable housing is not made available in Hawthorne to the displacees by the time they are displaced, they will have to move out of Hawthorne altogether. This is not simply a case of the city preventing non-resident minorities from moving into the city: if replenishment housing is not built in time, Hawthorne will succeed in depopulating itself of a large number of its current minority residents. Hawthorne’s own “Housing Element” shows that the tracts affected by the freeway have a higher percentage of minority residents than the other tracts in Hawthorne. Exhibit 2 at p. 6. The Housing Element also acknowledges that there is a much larger percentage of minority than white residents below the poverty level and that the “[r]apid increases in new and existing housing costs . have resulted in the inability of lower income households to successfully compete for decent, affordable housing.” Exhibit 2 at pp. 9, 19. With 1,104 Hawthorne families facing displacement, and at most only 128 units of replenishment housing in the process of construction in Hawthorne, the failure promptly to start construction of the two developments at issue seriously jeopardizes the ability of a large number of minority residents to continue residing in Hawthorne. Thus, the “ultimate effect” of Hawthorne’s actions, like the immediate effect, is racially discriminatory. See Rizzo, 564 F.2d at 149 (ultimate effect of city agencies’ actions in razing integrated housing for urban renewal, but failing to build replacement housing, was racially discriminatory). (2) Intent. The court finds that the plaintiffs have failed to show that the City Council acted with discriminatory intent. But this is “the least important of the four factors” and “should be partially discounted.” Arlington Heights, 558 F.2d at 1292, 1294. “[I]ntent, motive and purpose are elusive concepts,” ... and attempts to discern the intent of an entity such as a municipality are at best problematic____ A strict focus on intent permits racial discrimination to go unpunished in the absence of evidence of overt bigotry. As overtly bigoted behavior has become more unfashionable, evidence of intent has become harder to find. But this does not mean that racial discrimination has disappeared. Id. at 1290 (quoting Hawkins v. Town of Shaw, 461 F.2d 1171, 1172 (5th Cir.1972) (en banc) (per curiam)). The plaintiffs’ failure to prove discriminatory intent in Arlington Heights did not preclude them from establishing a prima facie case. Id. at 1294. Likewise, the plaintiffs’ failure to prove discriminatory intent in the instant case does not preclude them from establishing a prima facie case by a sufficient showing that the other three elements exist. (3) Justifications. Because Hawthorne “is a governmental body acting within the ambit of legitimately derived authority, [this court] will less readily find that its action violates the Fair Housing Act.” Arlington Heights, 558 F.2d at 1293. Municipalities are traditionally afforded wide discretion in zoning. Village of Belle Terre v. Boraas, 416 U.S. 1, 8-9, 94 S.Ct. 1536, 1540-1541, 39 L.Ed.2d 797 (1974). However, as discussed in Section B below, the court finds that Hawthorne’s proffered justifications for imposing the 35% limitation on the number of units in the Cerise Development that may be rented to low income tenants and denying the zone change, lot split, and site development applications for the Kornblum Development are merely pretextual. The city’s failure to show any legitimate interest in taking these actions is another factor that weighs in favor of the plaintiffs. (4) Prohibitory Remedy. The plaintiffs do not seek to compel Hawthorne affirmatively to provide housing for members of minority groups, but merely to enjoin Hawthorne from interfering with private property developers who wish to provide such housing. “[T]he courts are far more willing to prohibit even nonintentional action by the state which interferes with an individual’s plan to use his own land to provide integrated housing” than to “require a defendant to appropriate money, utilize his land for a particular purpose, or take other affirmative steps toward integrated housing ____” Arlington Heights, 558 F.2d at 1293. Thus, this factor also favors the plaintiffs. B. Hawthorne’s justifications. Because the plaintiffs have established a prima facie case, the burden shifts to Hawthorne to offer non-discriminatory reasons for its actions. The Eighth Circuit has held that to rebut a prima facie case under Title VIII, the defendant must “demonstrate that its conduct was necessary to promote a compelling governmental interest.” Black Jack, 508 F.2d at 1185. In Rizzo, the Third Circuit rejected the Black Jack test, holding that the defendant need only prove a compelling governmental interest when the plaintiff has made a showing of purposeful discrimination sufficient to establish a constitutional violation. Rizzo, 564 F.2d at 148. Analogizing to the “business necessity” test applied in Title VII cases, the Rizzo court formulated the following test for Title VIII cases: “a justification must serve, in theory and practice, a legitimate, bona fide interest of the Title VIII defendant, and the defendant must show that no alternative course of action could be adopted that would enable that interest to be served with less discriminatory impact.” Id. at 149. Hawthorne justified imposing the 35% limitation on the number of units that could be rented to low income tenants in the Cerise Development as furthering Hawthorne’s policy of dispersing low income residents throughout the city. Hawthorne justified its denial of the Kornblum applications primarily because of potential overcrowding of schools, increase in traffic, increase 'in housing density, and loss of taxes. In addition, to disavow any discriminatory intent or impact, Hawthorne submitted to the plaintiffs and intervenors a list of 52 alternate sites on which Goldrich & Kest allegedly could build the Kornblum Development. The court finds that regardless of whether it applies the Eighth Circuit’s “compelling interest” test or the Third Circuit’s “legitimate, bona fide interest” test, Hawthorne has failed to meet its burden. (1) Dispersion. The sole proffered reason for requiring the developer to record a covenant restricting the number of units rented to low income tenants at the Cerise Development is to promote the dispersion of low income tenants throughout the city. But Hawthorne’s policy, as set forth in its Housing Element, is to “support the dispersion of low income housing,” not low income tenants. Exhibit 2 at p. 23 (emphasis added). There is a subtle, but important difference between dispersing tenants so that only a few can live in any one housing project and dispersing housing projects so that only a few are located in any one neighborhood. It is the latter that Hawthorne has adopted as its policy: One of the City of Hawthorne’s policies is to expand housing opportunities for lower income households but avoid concentration of such groups. However, the constraint to homogeneous dispersion through the city is chiefly economic. The areas having the largest percentages of low income households are characterized as having the lowest quality, values and rents which in effect constitute affordable opportunities for such groups. Programs available to the citizens that combat any or all of these factors are supported by the city and will be provided whenever possible. Exhibit 2 at p. 19 (emphasis added). Thus, Hawthorne’s stated policy is to disperse housing projects into wealthier areas, not disperse tenants among housing projects. Because the Moneta Gardens Area is one of the wealthier neighborhoods in Hawthorne, the proposed Cerise Development actually furthers the city’s policy by making rents affordable to qualified low income tenants. To the extent Hawthorne is arguing that it has an unstated policy of dispersing low income tenants, it has provided no evidence of such a policy. If Hawthorne had legitimately adopted such a policy, Hawthorne would be requiring all developers to make a certain percentage of their housing units affordable to low income households. On the contrary, Hawthorne has never imposed this sort of a requirement on any housing development except the Cerise Development. Hawthorne’s justification of “dispersion” is simply a pretext for discriminating against low income households and preventing them from moving into better neighborhoods. (2) Schools. Counsel for Hawthorne has argued that the primary reason the City Council denied the applications for the Kornblum Development was to prevent the overcrowding of schools. Yet other actions by Hawthorne’s officials have demonstrated the pretextual nature of this justification. ' From the period of December 1, 1984, to April 15, 1985, Hawthorne’s Building Department issued building permits for 18 apartment developments, with a total of 426 apartment units, to be built in the city. Exhibit 38 at p. 2. Ten of the 18 developments, 242 of the 426 units, are located in the same Hawthorne School District school attendance zone as the proposed Kornblum Development. Id. at p. 3. Moreover, on March 29, 1985, the Planning Department recommended approval of an application for a zone change from H (horticultural) to R-3 (residential) for a 49 unit apartment development in the same school attendance zone as the Kornblum Development. The Planning Department’s report states that “[s]chool impact will be felt,” but it is “insignificant when contrasted with the area[’]s potential to develop high density residential apartments.” Exhibit 38, exhibit C at p. 2. The Planning Commission approved the zone change on April 3, 1985, with no opposition from the Hawthorne School District. Id., exhibit D. Finally, 22 of the 52 alternate sites on which Hawthorne proposes that the Kornblum Development be built are located in this same school attendance zone. Exhibit 37 at p. 2. Hawthorne cannot convincingly argue that it is concerned with overcrowding schools servicing the Moneta Gardens Area when it approves other developments in the area and suggests that Kornblum be built .elsewhere in the area. The developer made every effort to minimize the Kornblum Development’s effect on the schools by committing all of the single units to senior citizens and by agreeing to participate in a “school development assessment” imposed on all similar residential developments. If Hawthorne is willing to approve other developments in the area that have not made the same concessions, this court will not permit it to deny the Kornblum Development applications on the grounds of school overcrowding. (3) Traffic. Another reason Hawthorne gives for denying the Kornblum applications is the increase in traffic that the development will cause. Yet no evidence was presented to either the Planning Commission or the City Council supporting the proposition that the development would unduly increase the traffic flow. Of course, the development will create more traffic than the horticultural nursery currently occupying the parcel. But the nursery is admittedly underutilizing the parcel and will be replaced by some other user, either commercial or residential. As Mayor Hocker noted, “anything that we put over there is going to put in a great deal of traffic. I think anything that’s other than this is going to bring even more traffic.” Exhibit 21 at p. 32. Although, as noted above, there is no evidence concerning comparative traffic flows, it is obvious that a commercial development, such as a shopping center, would create more traffic than the proposed apartment development and that this lot is too deep to be feasible for other residential development, such as single family homes. In short, this court finds increased traffic a conjectural pretext for denying the developer’s applications. (4) Density. Hawthorne also offers excessive housing density as a reason for denying the Kornblum applications. Again, absolutely no evidence was presented to either the Planning Commission or the City Council on the comparative density of alternate types of residential developments. What little evidence there is in the record on this issue supports the conclusion that the project is, if anything, less dense than the alternatives. The Planning Department noted that the developer’s requested zoning of the parcels to R-3 would permit 1250 square feet per unit, but the proposed development has a density of 1998 square feet per unit, % as dense as permitted. Exhibit 9 at p. 4. The staff concluded that the project was “a good example of a medium density development that adequately mitigates the overpowering mass of typical two and three story apartment developments in the area.” Id. Because the City Council heard no facts which would disprove the staff’s conclusion, the Council cannot legitimately justify denying the Kornblum applications on the ground of excessive density. (5) Taxes. A number of the local residents present at the November 13 hearing apparently believed that if a non-profit organization purchased the Kornblum Development from HCD, it would pay no taxes on the building. Exhibit 20 at pp. 14, 30-31. In his follow-up letter to the City Council, the City Manager explained that only public housing authorities, such as the Hawthorne Housing Authority, could buy the building and pay no taxes on it. Exhibit 16 at p. 3. He added that although the county also has a housing authority, the county would not buy a building in Hawthorne without an agreement from the city. Id. In short, the entity that purchases the building will have to pay property taxes on it, unless Hawthorne allows its own or the county’s Housing Authority to purchase the building. The remaining question is whether the owner of Kornblum will pay substantially less in taxes than would the owner of a comparable non-Century Freeway development. At the November 13 hearing, the Kornblum developer explained that the building’s purchaser would pay 1% of the building’s value in property taxes to the county and that the city gets only 7% of that 1%. Thus, for every million dollars of the building’s value, Hawthorne receives only $700 in property taxes. Exhibit 20 at pp. 7-8. So, whether the building is valued at one or two million dollars more or less will make no substantial difference in the amount of property taxes the city will receive. This court agrees with the City Manager that the building will probably sell for less than a comparable non-Century Freeway development. Exhibit 16 at p. 4. The building’s value is generally determined by the income produced. The percentage of the units set aside for low income tenants will lower the income produced and therefore lower the value. But, as noted above, even if the building sold for 5 million instead of 7 million dollars, it would make little practical difference to the city’s coffers. Moreover, the developer agreed to record a 10 year covenant that would require the building’s owner to pay any difference in property taxes between those based on the valuation of the building that the County Assessor would make (which would be lower than a non-Century Freeway building to reflect the lower income) and the valuation the Hawthorne Building Department would make (which would be the same as a comparable non-Century Freeway building). Exhibit 20 at p. 8. Therefore, the loss of taxes to the city, if any, on the Kornblum Development will be far too minimal to justify denying the developer’s applications. (6) Alternate Sites. After this lawsuit was commenced, Hawthorne submitted to Goldrich & Kest a compilation of 52 alternate parcels of property upon which Century Freeway replenishment housing allegedly could be built. See Exhibit 202, exhibits B & C. Hawthorne argues that the developer’s ability to build replenishment housing on one or more of these 52 alternate parcels eliminates any adverse effect on low-income racial minorities caused by the city’s refusal to permit construction of the Kornblum Development on its proposed site, 13000 and 13001 Kornblum Avenue. To disprove adverse effect, however, Hawthorne must do more than simply present a number of parcels where replenishment housing could theoretically be built. The burden is on Hawthorne to identify a parcel of land within Hawthorne which is properly zoned and suitable for replenishment housing under state standards. Arlington Heights, 558 F.2d at 1293. Moreover, time is of the essence. If replenishment housing is not ready in Hawthorne by the time its residents are displaced, they will have to move outside of the city. Thus, Hawthorne also bears the burden of identifying a parcel or combination of parcels on which the Kornblum Development, as presently planned, can be located without undue delay. The time required for the developer to draw up new building and construction plans to fit parcels whose size or configuration vary significantly from the Kornblum parcels and then to submit the new plans for state approval would delay construction of the replenishment housing past the date of displacement. At this late date, even the time required by the Century Freeway Housing Program to approve re-siting the Kornblum Development on a different parcel of property would jeopardize the possibility of replenishment housing being available in time. The court finds that Hawthorne has failed to meet its burden of identifying a suitable alternate site for the Kornblum Development. The staff of the Century Freeway Housing Program reviewed the alternate parcels and submitted to the court reasons why none of the alternate sites are comparable to the proposed Kornblum site. Exhibit 301A. Twenty of the parcels require rezoning; 15 of the parcels have residential housing currently located on them, violating one of the Century Freeway Housing Program’s requirements for development; 21 of the parcels are surrounded by industrial or commercial developments, violating the Housing Program’s requirement that replenishment housing be surrounded by compatible uses; 4 of the parcels can accommodate fewer than 20 housing units, the minimum number of units the Housing Program requires; 2 of the parcels have current commercial use which the Housing Program does not have authority to displace; 6 of the parcels are outside of Hawthorne’s jurisdiction and must be annexed before being considered within city limits; and 1 parcel is currently under construction. Exhibit 301A. The Century Freeway Housing Program staff could approve the development of replenishment housing on only 3 parcels — currently used as a park — which, when combined together, would accommodate a total of only 25 units of housing — 71 units less than the proposed Kornblum Development. Exhibit 301A at pp. 10-11. Goldrich & Kest also reviewed the alternate parcels and sent letters to owners of eight sites that could possibly be suitable for the Kornblum Development. Exhibit 35 at p. 2. Three of the eight owners responded, all stating that their properties were not available for sale. Id. Hawthorne’s submission of the 52 alternate parcels does not, therefore, disprove the adverse effect caused by its refusal to permit the Kornblum Development to be built at its proposed site. In conclusion, none of Hawthorne’s purported justifications are legitimate. Because the plaintiffs and intervenors have established a prima facie case and Hawthorne has failed to rebut it, the court finds that Hawthorne has violated the Fair Housing Act, 42 U.S.C. § 3604(a). II. Hawthorne’s imposition of the 35% limitation on the number of units in the Cerise Development that may be rented to low income tenants and its denial of the lot split, zone change, and site development applications for the Kornblum Development violate California Government Code § 65008. The California legislature has extended the protection against discrimination in housing that Congress provided in Title VIII. California Government Code § 65008 outlaws discrimination against residential developments in addition to people and outlaws discrimination on the basis of income in addition to race. Section 65008 provides in pertinent part: (b) No city, county, or city and county shall, in the enactment or administration of ordinances pursuant to this title, prohibit or discriminate against any residential development or emergency shelter because of the method of financing or the race, sex,, color, religion, national origin, ancestry, or age of the intended occupants of the development or shelter. (c) No city, county, or city and county shall, in the enactment or administration of ordinances pursuant to this title, prohibit or discriminate against a residential development or emergency shelter because the development or shelter is intended for occupancy by persons and families of low and moderate income____ (d) No city, county, or city and county may impose different requirements on a residential development or emergency shelter which is subsidized, financed, insured, or otherwis